OPEN APP
Home / Industry / Banking /  Bombay HC rejects stay on LVB-DBS merger

Bombay HC rejects stay on LVB-DBS merger

As on 30 September, foreign portfolio investors (FPI) had 8.65%, and insurance firms, including Life Insurance Corp. of India, held 6.40% in LVB. (ANI)Premium
As on 30 September, foreign portfolio investors (FPI) had 8.65%, and insurance firms, including Life Insurance Corp. of India, held 6.40% in LVB. (ANI)

  • RBI argued that the LVB is with a negative networth and all efforts were made to revive it, which failed
  • According to the final scheme of amalgamation of LVB with DBS Bank India, the entire amount of the paid-up share capital will be written off resulting in shareholders losing their entire investment

MUMBAI : The Bombay High Court on Thursday refused to grant stay on the final scheme of amalgamation between DBS bank and Lakshmi Vilas Bank which will come into effect on Friday. A group of promoter entities had initiated legal action against the Reserve Bank of India, the Union of India & DBS Bank, seeking claims for shareholders whose entire equity will be wiped out post the amalgamation.

In the hearing held on Friday, the court said that it is not inclined to give a stay on the amalgamation scheme which will be effective from 27 November. Let the parties file their affidavits and the arguments will be heard on 14 December," said a person who attended the court hearing. The matter was heard by Justice Nitin Jamdar and Justice Milind Jadhav.

A writ petition was filed at the Bombay High Court by Kare Electronics & Development Private Ltd, Pranava Electronics Private Ltd and KR Pradeep. A separate petition was filed byy Indiabulls Housing Finance which holds 4.99% in LVB. The petition said that while the promoters are not against the amalgamation per se, they argued that LVB has been given away by RBI in a hurry without taking into account shareholders' interest, said the person cited earlier.

RBI on the other hand argued that the bank is with a negative networth and all efforts were made to revive it, which failed. Therefore RBI had to go ahead with the amalgamation in public interest and in the interest of depositors. LVB has nearly 4000 employees and 20 lakh depositors. RBI has therefore exercised its powers in accordance with the law

According to the final scheme of amalgamation of LVB with DBS Bank India, the entire amount of the paid-up share capital will be written off resulting in shareholders losing their entire investment. LVB’s retail shareholders, holding 23.98% of its shares as on 30 September, will be left with absolutely nothing, with RBI proposing to delist any listed shares or debentures of the bank after the merger.

As on 30 September, foreign portfolio investors (FPI) had 8.65%, and insurance firms, including Life Insurance Corp. of India, held 6.40% in LVB. FPIs include India Opportunities Growth Fund Ltd-Pinewood Strategy, EQ Assets and Aviator Emerging Market Fund. Aditya Birla Sun Life Insurance and Pramerica Life Insurance held 1.83% and 2.73%, respectively.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Close
Recommended For You
×
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout